Order No. 2002-R-218

June 11, 2002

With Decision No. 323-R-2002

IN THE MATTER OF complaints filed by Naber Seed & Grain Co. Ltd. respecting the provision of railway cars by the Canadian National Railway Company.

File No. T7375-3/01-8

On November 22, 2000, Naber Seed & Grain Co. Ltd. (hereinafter NSG) filed a complaint with the Canadian Transportation Agency (hereinafter the Agency), pursuant to section 116 of the Canada Transportation Act, S.C., 1996, c. 10 (hereinafter the CTA), alleging that the Canadian National Railway Company (hereinafter CN) has failed to provide adequate and suitable accommodation for the carriage of bulk products from its facilities at Melfort and Star City, Saskatchewan, and Kathryn, Alberta, to the Port of Vancouver by refusing to deliver the car allocation required by NSG for Grain Shipping Weeks 6 to 17 of the 2000-2001 crop year (September 3 to November 25, 2000).

In its Decision No. 282-R-2001 dated May 29, 2001, the Agency determined that the lack of predictability and reliability in the car allocation at its three processing plants had severe repercussions on NSG's operations. Moreover, the facilities operated by NSG suffered from more severe car rationing over an extensive period of time than comparable shippers in the non-administered grain market. Consequently, the Agency concluded that CN had not provided NSG with a reasonable level of service and had not fulfilled its common carrier obligations under the CTA.

On October 11, 2001, NSG filed an additional complaint with the Agency, in which NSG raised similar concerns. The complaint relates to the car allocation provided to NSG by CN for Grain Shipping Weeks 18 to 38 of the 2000-2001 crop year (November 26, 2000 to April 21, 2001).

The Agency determined that an oral hearing would constitute an appropriate approach to properly and efficiently dispose of the issues raised by the two complaints. Accordingly, the Agency convened a hearing in Saskatoon, in the province of Saskatchewan, from January 28 to February 6, 2002, to hear evidence on NSG's allegations that CN breached its level of service statutory obligations for Grain Shipping Weeks 18 to 38 of crop year 2000-2001, on the remedies sought by NSG and specifically on the issue of whether running rights are an appropriate remedy, on CN's new car allocation programs, in particular as they relate to NSG, and on CN's argument on the rationing of railway hopper cars. The Agency has considered the complaints and the evidence presented by the parties and, in accordance with the Decision attached hereto, the Agency, pursuant to section 27 and subsection 116(4) of the CTA, hereby orders:

1. For the purposes of car ordering, allocation and rationing, CN shall consider the maximum car spot capacity of NSG's three processing facilities to be as follows:
   • Melfort: 34 hopper cars and 10 boxcars or 46 hopper cars
   • Star City: 20 hopper cars
   • Kathryn: 23 hopper cars
2. At time of rationing, CN shall not ration the car allocation of NSG under the general car allocation to less than the number of cars specified in Item No. 1 in a grain shipping week, or the actual number of cars ordered by NSG.
3. At time of rationing, where NSG orders cars under the general car allocation and through the West Coast Staging program (hereinafter WCS program), the number of cars allocated to NSG under the general car allocation shall not be affected by the number of cars reserved by NSG through the WCS program. This will provide NSG access to cars beyond the one full car spot allocation in a grain shipping week at a facility.
4. For the processing facility located in Melfort, CN shall spot the cars allocated for a grain shipping week in one or two switch operations, as requested by NSG.
5. When requested by NSG, CN shall pick up loaded rail cars twice a week at each processing facility.
6. In respect of direct-hit shipments, CN shall allow NSG to order cars for a grain shipping week that is up to two weeks ahead of the estimated time of arrival of the vessel.
7. CN shall allow NSG to provide, each Friday, its rail car orders for the grain shipping week starting nine days hence rather than the current requirement of Tuesday.
8. Under the WCS program, CN shall allow NSG to book up to three contracts in respect of a single origin facility in a single grain shipping week. This will allow NSG to book cars in advance for shipment in a future grain shipping week to multiple West Coast destination facilities.
9. CN shall allow NSG to participate in the WCS program, even though NSG does not have an available approved line of credit with CN, provided that NSG supplies to CN a letter of credit from a major financial institution that secures NSG's obligations to CN under the WCS program.
10. CN shall assist NSG financially with the information and communication system development necessary to provide NSG the capability to transmit bills of lading to CN through electronic data interchange in order to qualify for rebates in CN's Efficiency Payment Program.
11. For a period of one year following the issuance of this Order, CN and NSG are to report to the Agency, on a monthly basis, the number of cars by type ordered by NSG and the number of cars by type delivered by CN, with a justification for any shortfall. Reports may also include specific characteristics of the service provided that may raise concerns. Such reports should be submitted with the Agency no later than one week following the end of each calendar month.

Although the Agency does not contemplate further action with respect to this matter at this time, the Agency will monitor the implementation of these measures for a period of one year following the issuance of this Order.